ORDER

1. This appeal against reference under Section 256 of the Income Tax Act, 1961, for short the Act, raises the following question :

"Whether on the facts and circumstances of the case and having regard to the second proviso to Rule 5 of the Income Tax Rules, 1962, the Tribunal was correct in law in holding that the extra shift depreciation allowance for double and triple shifts in the case of the seasonal factory was not to be calculated at 100% of the normal depreciation allowance in the relevant previous year even though it had worked triple shift during the entire working season of that year."

The question was answered by the Division Bench of the Allahabad High Court in I.T.R. No. 57 of 1977 dated 10-8-1981 in favour of the Revenue and against the assessee. Thus this appeal by special leave.

2. It is contended for the assessee that since the appellant had worked in the sugar factory for 152 days which is a seasonal factory and of distillery for 215 days in the accounting year 1-10-1963 to 30-9-1964, the appellant is entitled to the calculation of the extra depreciation on triple shift on the basis of 152/180 actual working days and not 152/300 as calculated by ITO and accepted by the High Court. In support thereof, he seeks to place reliance on the first explanation to Rule 5 of Appendix I of the Rules.

3. Section 32 of the Act provides for allowing deduction in respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purpose of business or profession. In the case of buildings, machinery, plant or furniture, other than ships, covered by clause (1) depreciation is allowed at such percentage on the written down value thereof as prescribed. That provision, insofar as it is relevant for our present purpose, reads as follows :

"32. (1) In respect of depreciation of buildings, machinery, plant or furniture owned by the assessee and used for the purposes of the business or profession, the following deduction shall, subject to the provisions of Section 34, be allowed-

(i)

*

*

*

(ii) in the case of buildings, machinery, plant or furniture, other than ships covered by clause (i) such percentage on the written down value thereof as may in any case or class of cases be prescribed :

Provided that where the actual cost of any machinery or plant does not exceed seven hundred and fifty rupees, the actual cost thereof shall be allowed as a deduction in respect of the previous year in which such machinery or plant is first put to use by the assessee for the purposes of his business or profession ... ."

2. (33) Prescribed means "Prescribed by rules made under the Act". Rule 5 of the I. T. Rules, 1962, prescribes as follows:

"5. Depreciation.- (1) Subject to the provisions of sub-rules (2) and (3), the allowance under clause (i) or clause (ii) of sub-section (1) of Section 32 in respect of depreciation of buildings, machinery, plant or furniture shall be at a percentage of the actual cost or the written down value, as the case may be, equal to (i) 100 per cent, (ii) fifty per cent, or (iii) nil per cent of the number shown in the corresponding entry in the second column of the statement in Part I of Appendix I to these rules according as the buildings, machinery, plant or furniture have been used by the assessee in his business or profession during the previous year (i) for a period of 180 days or more, {ii) for a period of less than 180 days but more than thirty days, or (iii) for a period of thirty days or less than thirty days, respectively ... :

Provided further that in the case of a seasonal factory worked by the assessee during all the working seasons of the previous year, depreciation shall be allowed as if the buildings, machinery, plant or furniture had been in use throughout the period the assessee was the owner thereof during the previous year."

It is Item III of Pt. I of App. I referred to in Rule 5 which is relevant for our present purpose and it reads as follows:

Class of asset

Rate

Remarks